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ARLINGTON, Va. — NAFCU President and CEO Fred Becker wrote NCUA asking for a number of regulatory relief items for credit unions and their corporates as part of the agency’s review of one-third of its regulations every three years. Becker requested that the loan maturity limit be extended from 12 years for large consumer and member business loans to 25 years, as NCUA has done with mortgages and mobile homes. “This will enable credit unions to remain competitive with other lenders and also enable more middle and lower income members to take advantage of these types of loans,” he wrote. NAFCU also expressed concern over joint guidance issued in 2004 on overdraft protection services. The guidance recommended recording the balances as loans for safety and soundness purposes, but NAFCU said they should be treated as receivables and offset as any other overdrawn share account is. “Furthermore, mixing loans and negative share losses together may distort the financial statements and not permit a reader of the statement to properly assess the quality of the loan portfolio,” Becker wrote. The same guidance also recommends that financial institutions notify consumers before non-check transactions trigger fees. However, this is impractical with ACH debits or foreign ATM transactions. Regarding investment and deposit rules, Becker noted that federal credit unions and corporates are permitted to invest in principal-only exchangeable collateralized mortgage obligations under certain restrictions. However, Becker argued, “A PO stripped mortgage backed security, however, can, if paid off early, result in significant gains and does not necessarily have more risk than a PO purchased at greater than 80 percent of par. Therefore, a PO that trades at a steep discount often possesses fewer risks than one that trades at par. NAFCU believes that this condition should be eliminated so long as the credit union demonstrates an understanding of the risks associated with investing in a steeply discounted PO.” NAFCU also urged NCUA to continue to work toward risk-based capital for corporate credit unions as well as lightening their Bank Secrecy Act load and amending future-dated ACH accounting. Finally, NAFCU asked that the agency revise its process for assisted mergers after receiving reports of inefficiency and difficulty in understanding the process. “Also, in some cases, members have expended tremendous effort and resources to plan for the merger only to learn later, sometimes months later, that another credit union was chosen as the merger partner with little explanation from the agency,” Becker pointed out. He requested that the agency come up with standardized timelines for the process.

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